Multiple Choice- Theory: Part 1

1. Which of the following entities below is not considered as a business?

a. A sari-sari store with P 500,000 annual sales

b. A new stand with sales exceeding P100,000

c. A cigarette vendor with sales not exceeding P 100,000

d. An employed professional earning part-time self-employment income not exceeding P

100,000

2. Which of the following is not considered as engaged in business?

a. A purely self-employed individual

b. Self employed and employed individual

c. A purely employed individual

d. A and B

3. Which of the following is not subject to business tax even if made by a registered business?

a. Sale of goods

b. Sale of services

c. Sale of properties considered as ordinary assets

d. Sale of properties considered as capital assets

4. Which is not engaged in business?

a. A corporate

b. A broker

c. An agent

d. A security dealer

5. Which of these is least likely to be subjected to business tax?

a. Sale of stocks held as inventory

b. Sale of bonds held as inventory

c. Sale of stocks held as investment

d. None of these
6. Which is considered engaged in business even if not regularly engaged in trade?

a. A non resident seller who exports into the Philippines

b. An importer who imports goods into the Philippines

c. A seller who makes a one time sale of real property

d. Any seller which sells goods or services at a price above P 100,000 during the year

7. Which of the following is considered to be engaged in business?

a. Government agencies

b. Non-profit organization

c. Sales agent

d. Consultant

a. A and B

b. C and D

c. B and C

d. None of these

8. Which is of these is always presumed to be made in the course of business, hence, subject to business
tax under the regulations?

a. Export sales

b. Importation

c. Domestic sales

d. All of these

9. The business tax on exempt sales is

a. VAT

b. Percentage tax

c. A or B

d. None

10. The consumption tax on importation is

a. VAT
 b. Percentage tax

c. A or B

d. None

11. The consumption tax on domestic sales is

a. VAT

b. Percentage tax

c. A or B

d. None

12. The business tax on services specifically subject to percentage tax is

a. VAT

b. Percentage tax

c. A or B

d. None

13. Which is more likely to qualify as a marginal income earner?

a. Artist

b. Consultant

c. Sales agent

d. Operators of a single unit tricycle

14. Statement 1: Sellers of goods are subject to percentage tax.

Statement 2: Sellers of services are subject to VAT.

Which statement is correct?

a. Statement 1

b. Statement 2

c. Both statements

d. Neither statement

15. Statement 1: Both the husband and the wife are subject to either VAT or percentage tax.
 Statement 2: The husband may pay VAT while the wife may pay percentage tax.

Which statement is false?

a. Both statements

b. Neither statements

c. Statement 1 only

d. Statement 2 only

16. Statement 1: An employed taxpayer will pay annual registration fee.

Statement 2: A self-employed taxpayer will pay annual registration fee.

Which statement is correct?

a. Statement 1

b. Statement 2

c. Both statements

d. Neither statement

17. The term gross selling price excludes

a. The contract price of the goods sold

b. Discounts which are contingent upon future events

c. Delivery charges

d. Sales returns and allowances

18. The term gross receipts excludes

a. Reimbursements for customer expenses paid by the service provider

b. Reimbursements for out-of-pocket expenses incurred by the service provider

c. Advances made by the client for services yet to be rendered

d. Cash collections for services rendered

19. Which is not a constructive receipt?

a. Bank deposits made available to the service provider without restriction

b. Transfer of amounts retained by the payor to the account of the contractor-service provider
 c. Judicial consignation by the payor of the contract price which the service provider wish to
donate to the payor

d. Collection of revenue for past services rendered

20. Which is part of gross receipts?

a. Amounts received which will be remitted to others persons

b. Receipt of notice from a debtor to offset the consideration of the service for the depth of the
service provider

c. Receipt from bank loans

d. Receipt from insurance of stocks or issuance of certificates of indebtedness

Multiple Choice- Theory: Part 2

1. A non -VAT registered service provider shall pay

a. 3% percentage tax on its gross receipts

b. 12% VAT on its value added

c. 12% VAT on its export sales or receipts

d. 3% percentage tax on its export sales

2. Which must be present to construe the existence of a business?

a. Regularity of transaction

b. Offering of services or goods to the public for a profit

c. Actual presence of profit during the period

d. Both A or B

3. A person who made a one-time or casual sale of properties is

a. Exempt from business tax

b. Subject to percentage tax

c. Subject to value added tax

d. Subject to either percentage tax or value added tax

4. A VAT registered person shall pay

 a. 3% percentage tax and VAT

b. 12% VAT on its sales or receipt

c. 12% VAT on its value added

d. 12% VAT on its export sales

5. Who is subject to VAT?

a. Those who optionally register as VAT taxpayer

b. Those who are mandatorily required to register as VAT taxpayer

c. Those who are registrable to VAT

d. Any of these

6. Who are not required to register to the VAT system?

a. Those who are below the VAT threshold

b. Those whose only sales are exempt sales

c. Those who only derive receipts from services specifically subjects percentage tax

d. Any of these

7. A non-VAT registered seller of goods shall pay

a. 3% percentage tax on its gross receipts

b. 12%percentage tax on its value added

c. 3% percentage tax on its sales

d. 12% VAT on its gross receipts

8. A VAT registered seller of goods shall be subject to

a. 12% output VAT on sales

b. 12% output VAT on gross receipt

c. 3% percentage tax on sales

d. 3% percentage tax on gross receipts

9. Who is entitled to claim (deduct) input VAT against output VAT against output VAT?

a. A VAT registered persons only

 b. VAT registrable persons only

c. Non-VAT registered persons

d. All of these

10. Who pays percentage tax?

a. Those who exceed the VAT threshold and opted to be register as non-VAT

b. Those who did not exceed the VAT threshold but are registered as VAT taxpayers

c. Only those service providers specifically subject to percentage tax

d. Those providers of services specifically subject to percentage tax and those who sales or
receipt in any 12- month period are below the VAT threshold

11. When the receipts from services specifically subject to percentage tax exceeds rhe VAT threshold,
future receipts from these services are

a. Exempt from percentage tax

b. Still subject to the same percentage tax

c. Subject to VAT

d. Subject to 3% percentage tax

12. A VAT registered person who did not exceed the VAT threshold will pay

a. VAT

b. Percentage tax

c. Both A and B

d. Either A or B at his discretion

13. Once the vatable sales or receipts exceeds the VAT threshold, future monthly sales from vatable sales
or receipts shall be subject to

a. 3% percentage tax

b. Percentage taxes of various rates

c. 12% VAT

d. 0% VAT

14. A marginal income earner shall pay

a. 3% percentage tax
 b. 12% VAT

c. Either A or B

d. Neither A nor B

15. The export sales of VAT registered taxpayer is

a. Subject to zero-rated VAT

b. Exempt from business tax

c. Subject to 12% VAT

d. Subject to 3% percentage tax

16. The export sales of non-VAT registered taxpayer is

a. subject to zero rated VAT

b. Exempt from business tax

c. Subject to 12% VAT

d. Subject to 3% percentage tax

17. A non-VAT person with exempt sales exceeding the VAT threshold is still

a. Exempt from business tax on exempt sales

b. Exempt from VAT on all its sales

c. Exempt from percentage tax on all sales

d. A and B

18. A VAT-registered person who exceeded the VAT threshold will pay

a. VAT

b. Percentage tax

c. Both A and B

d. Either A or B at his discretion

19. A non-VAT registered person who exceed the VAT threshold shall pay

a. VAT

b. Percentage tax
 c. Both A and B

d. Either A or B at his discretion

20. A non-VAT registered person who did not exceed the VAT threshold shall pay

a. VAT

b. 3% percentage tax

c. Percentage tax at various rates

d. Either A or B at his discretion

21. What is the general VAT threshold?

a. P 1,919,800

b. P 1,919,500

c. P 1,500,000

d. P 10,000,000

*P3,000,000

22. Which is a special VAT threshold?

a. P 1,919,800

b. P 1,919,500

c. P 1,500.000

d. P 10,000,000

*P3,000,000

23. The mandatory or voluntary registration as VAT taxpayers under the special threshold is

a. Revocable anytime

b. Revocable after the lapse of three years

c. Revocable within a year

d. Perpetually irrevocable

24. Mandatory or voluntary registration as VAT taxpayer under the general threshold is

a. Revocable anytime
 b. Revocable after the lapse of three years

c. Revocable within a year

d. Perpetually irrevocable

25. The VAT registration upon commencement of operation based upon expectation of exceeding the
VAT threshold shall be

a. Revocable anytime

b. Revocable after the lapse of three years

c. Revocable within a year if sales do not actually exceed the VAT threshold.

d. Perpetually irrevocable.

Multiple Choice- Problems 1

1.Mrs. Belle, self-employed, generated the following rreceipts during the year:

Proceeds of health insurance P 300,000

Receipts from business advisory services P 250,000

Receipts of rentals from boarding house P 100,000

What is the total amount subject to business tax?

a. P 100,000

b. P250,000

c. P 350,000

d. P 650,000

2. A person engaged in business sold the following properties:

Sales of goods held for sale P 200,000

Sales of personal residence P 2,000,000

Sales of personal car P 500,000

Compute the sales in the course of business subject to business tax.

a. P 0

b. P 200,000

c. P 2,200,000
 d. P 2,700,000

3. Mr. Julio, employed, received the following from his employer:

Proceeds of property insurance P 200,000

Proceeds of bank loan P 300,000

Compensation income P 500,000

What is the amount subject to business tax?

a. P 0

b. P 200,000

c. P 300,000

d. P 500,000

4. Mr. Jun Kim, a security broker effected the sales of several securities resulting of Kim Jong-un in the
following commissions:

Sales commission

Sales of stocks P 120,000 P 1,200

Sales of bonds P 280,000 P 2,800

Total P 400,000 P 4,000

Compute the amount of receipts or sales of Mr. Jun Kim subject to business tax.

a. P 0

b. P 4,000

c. P 400,000

d. P 404,000

5. Assuming Kim Jong-un is an investor in stocks, what is the amount subject to business tax?

a. P 0
 b. P 4,000

c. P 400,000

d. P 404,000

6. Mr. Masipag had annual gross receipts not exceeding P 100,000. During the month, hi had made the
following sales:

Sales of car rugs P 2,000

Sales of cigarettes P 3,000

Sales of candies P 3,000

Total P 8,000

Compute the total amount subject to business tax.

a. P 0

b. P 2,000

c. P 5,000

d. P 8,000

7. Mr. Kim Jong, a security dealer, sold the following during the month:

Sales of securities for own account P 400,000

Commission income on sale of securities of clients P 36,000

Sale of vacant lot held as investment P1,000,000

What is the amount subject to business tax?

a. P 0

b. P 36,000

c. P 436,000

d. P 1,436,000

8. A non-stock charitable organization realized the following during the month:

Membership contributions P 300,000

Donation from various donors P 400,000

Sales of souvenirs P 200,000

Compute the amount subject to business tax.

a. P 0

b. P 36,000

c. P 500,000

d. P 900,000

9. JDC Corporation, a merchandiser, made the following sales during the month:

Sales of merchandise P 200,000

Commission income from consignors P 50,000

Sales of stocks investments P 180,000

Compute the amount subject to business tax.

a. P 200,000

b. P 250,000

c. P 380,000

d. P 430,000

10. Mang Indo has a sari sari store with P 500,000 annual sales. He had the following sales during the
month

Sales of various merchandise P 30,000

Cash donated bi his brother P 200,000

Cash from proceeds of bank loan P 300,000

Compute the amount subject to business tax.

a. P 0

b. P 30,000

c. P 230,000

d. P 530,000

11. Mr. McCullot is a consultant. During the month, he has only one client from which he derived the
following receipt:

Professional fees P 150,000

 Less: withholding tax P 7,500

Net amount received P 142,500

What is the amount subject to business tax?

a. P 0

b. P 7,500

c. P 142,500

d. P 150,000

12. Mang Pandong is a farmer. He sold his agricultural land costing P 200,000 for P 1,000,000 to start a
palay trading business. What is the amount subject to business tax?

a. P 0

b. P 200,000

c. P 800,000

d. P 1,000,000

13. Ms. Cumacaliua is con currently employed to Cuaman Corporation and Paatras Company. He
received the following during the month:

Cumanan Paatras

Proffesional fees P 50,000 P 40,000

Less:

Creditable withholding tax P 7,000 P 6,000 Loan

repayment - P 12,000

SSS, PhilHealth, HDMF P 3,000 -

Net pay P 40,000 P 22,000

Compute the amount subject to business tax.

a. P 0

b. P 62,000

c. P 77,000

d. P 90,000
14. Effective 2015, Kanlaon Corporation, a VAT-taxpayer, cahnged its accounting period to a fiscal year
ending every August 30. What is the deadline for the first quarter VAT return under the new accounting
period?

a. September 25, 2015

b. September 25, 2016

c. November 25, 2015

d. December 25, 2015

15. In the immediately preceding problem, the third quarterly VAT return shall be filed on or before

a. May 20, 2016

b. May 25. 2016

c. June 20,2016

d. June 25, 2016

Multiple Choice- Problem 2

1. Jackpruit, a seller of goods, had the following transactions in January 2015.

Cash sales P 200,000

Credit/ Installment sales (40% collected) 300,000

Sales return and allowances 40,000

Freight-out charged to customers 20,000

What is the amount subject to business tax?

a. P0

b. P460,000

c. P480,000

d. P500,000

2. Atty. Saturday Sabado and Atty. Sunday Domingo formed a general professional partnership for the
exercise of their legal profession. Their partnership Sabado-Domingo Law Office started operation on
July 1, 2014 as a VAT taxpayer. The partnership adopted the calendar year basis.

The professional partnership shall file its first monthly VAT return on
 a. July 20,2014

b. July 30,2014

c. August 20,2014

d. August 30,2014

3. In the intermediately preceding problem, what is the deadline of the first quarterly VAT return?

a. July 30,2014

b. August 30,2014

c. August 25,2014

d. October 25,2014

4. A service provider had the following income during the month:

Fees, paid in cash and checks P 80,000

Fees, paid in notes 150,000

Advances by clients for future services 20,000

Reimbursement for out-of-pocket expenses 40,000

Reimbursement for client expenses 20,000

Total P 330,000

Compute the amount subject to business tax.

a. P350,000

b. P250,000

c. P160,000

d. P140,000

5. A taxpayer had the following sales or receipt in the past twelve months:

Exempt sales P1,500,000

Services subject to percentage tax 400,000

Other sales 800,000

 Total P2,700,000

What is correct?

a. The taxpayer is subject to VAT on all sales.

b. The taxpayer is subject to VAT on taxable sales other than exempt sales.

c. The taxpayer is subject to percentage tax on taxable sales other than exempt sales.

d. The taxpayer is subject to percentage tax on all sales.

*The taxpayer is subject to VAT on other sales.

6. Kudarat Company had the following sales and receipts data in the past twelve months:

Exempt sales P200,000

Services subject to percentage tax 400,000

Other sales 2,000,000

Total P2,600,000

Which is correct?

a. The taxpayer is subject to VAT on other sales.

b. The taxpayer is subject to VAT on taxable sales other than exempt sales.

c. The taxpayer is subject to percentage tax on taxable sales other than exempt sales.

d. The taxpayer is subject to percentage tax on all sales.

7. The following data pertains to a business taxpayer during a quarter:

January February March

Revenue (Sales) P200,000 P240,000 P230,000

Cash collections P180,000 P240,000 P220,000

Which of these properly reflect the monthly reporting of a non-VAT service provider?

January February March

a. P170,000 P240,000 P640,000

 b. P200,000 P250,000 P220,000

c. P180,000 P240,000 P220,000

d. P200,000 P250,000 P670,000

8. Which of these properly reflect the monthly reporting of a non-VAT seller of goods?

January February March

a. P170,000 P240,000 P230,000

b. P200,000 P250,000 P220,000

c. P170,000 P240,000 P640,000

d. P200,000 P240,000 P230,000

9. Which of these properly reflect the monthly reporting of a VAT service provider?

January February March

a. P180,000 P240,000 P640,000

b. P200,000 P250,000 P220,000

c. P170,000 P240,000 P640,000

d. P200,000 P250,000 P670,000

10. Which of these properly reflect the monthly reporting of a VAT seller of goods?

January February March

a. P170,000 P240,000 P230,000

b. P200,000 P240,000 P670,000

c. P170,000 P250,000 P640,000

d. P200,000 P250,000 P230,000

11. Mrs. Bote sells cakes to jeepney drivers who patronize her hot and sweet cakes. During the month,
Mrs. Bote sold P300,000 worth of cakes and collected P280,000. What is the amount to be reported for
business tax purposes?
 a. None

b. P280,000

c. P300,000

d. Indeterminable

12. The No-Taste is a restaurant offering local cuisines. Which is correct?

a. No-Taste is engaged in the sale of service.

b. No-Taste is engaged in the sale of goods.

c. No-Taste is engaged both in the sale of goods and services.

d. No-Taste is not engaged in business.

13. Marilyn is a beautician operating a beauty parlor. She is indebted to Zeus for P30,000. Unable to pay
her debt, Marilyn agreed to render services to Zeus. In return, Zeus cancels Marilyn's indebtedness.
Which is correct?

a. The cancellation of the P30,000 indebtedness is a gratuity subject to donor's tax.

b. The cancellation of the P30,000 indebtedness is exempt from income tax.

c. The cancellation of the P30,000 indebtedness is a constructive receipt of Marilyn subject to

business tax.

d. The cancellation of the P30,000 indebtedness is a constructive receipt of Zeus subject to

business tax.

14. A is a VAT-registered seller with annual sales of P1,000,000. During the month, he recorded only
P10,000 in sales and sustained an operating loss of P40,000. Which is correct?

a. The taxpayer is exempt from business tax during the month since there is an operating loss.

b. The taxpayer shall pay VAT.

c. The taxpayer shall pay percentage tax.

d. The taxpayer shall pay VAT if their annual sales exceeds P1,919,500 during the year.
Otherwise, he shall pay percentage tax.

15. Chemrex Company, a non-VAT taxpayer paying 3% percentage tax, exceeded the VAT threshold on
September 2014. Chemrex generated P300,000 and P400,000 sales in October and November and paid
P12,000 and P28,000 input VAT in these months, respectively. Chemrex immediately registered to the
VAT system at the start of November 2014.
Compute the business tax payable on October, assuming no claim for tax credit was filed.

a. P9,000

b. P24,000

c. P27,000

d. 36,000

16. Compute the business tax payable in October, assuming Chemrex claim for tax credit and was
approved by the BIR.

a. P9,000

b. P24,000

c. P27,000

d. 36,000

17. Compute the business tax payable in October, assuming Chemrex filed for a claim for tax refund.

a. P9,000

b. P24,000

c. P27,000

d. 36,000

18. Compute the business tax payable in November.

a. P12,000

b. P20,000

c. P36,000

d. P48,000

19. A non-VAT taxpayer paying 3% percentage tax received P104,000 cash and P6,000 CWT from the
sale of services. Compute the percentage tax.

a. P3,000

b. P3,120

c. P3,204

d. P3,300
20. A VAT-taxpayer received P52,000 plus P4,000 CWT certificate. What is the output VAT?

a. P5,571

b. P5,760

c. P5,820

d. P6,000